Trading around announcements

A

alainniala

Hi all,

I was wondering whether it is possible to trade only after announcements and make a profit.

For example, the University of Michigan number comes out, it is high, you know your product is going to rally so right away, you start buying it, even at a premium, knowing that it will go further up.

I suppose the key would be getting fast info and execution. So what would be the setup required? An automated trading program that gets its commands from the numbers on bloomberg for example?

What products would be best suited for this and do you think that overall it is a good trading strategy?

Thanks.
 
Quote from alainniala:

Hi all,

I was wondering whether it is possible to trade only after announcements and make a profit.

For example, the University of Michigan number comes out, it is high, you know your product is going to rally so right away, you start buying it, even at a premium, knowing that it will go further up.

I suppose the key would be getting fast info and execution. So what would be the setup required? An automated trading program that gets its commands from the numbers on bloomberg for example?

What products would be best suited for this and do you think that overall it is a good trading strategy?

Thanks.
More...

Hi alainniala,

You need to be extremely careful when trading soon before/at/soon after key economic report announcements.

The key is this...whatever trade signals you normally use through out the trading day...

Wait for the first knee jerk reaction to appear...then and only then...

if you see one of your trade signals...take the trade regardless if the announcement is good or bad.

Last of all...I've often seen the market rally on bad numbers and sell-off on good numbers...

Simply, to take a position such as a Long position when the numbers are good or to take a Short position when the announcement is bad...

without any actual trade signals...

is a bit absurd...

Especially when there are other key economic reports prior to 0945am est UofM Consumer Sentiment report that also have an impact on the trading day.

As for the University of Michigan Consumer Sentiment annoucements itself...that comes out at 0945am est (usually about mid month and end of month)...

For example...on Jan 16th Friday...the first knee jerk reaction after the announcement took the ES emini upwards...then there was a pause...then a tiny pullback to get Shorters on board using tight stops...

then a quick pop back up (stop runner) back up to the intraday highs...

then the ES puts in a very nice looking Advanced Bearish Tweezer Top candlestick pattern and a Bearish Divergence pattern (price action only)...

ES then procceeded to sell-off about 4.5 points...

From my trading notes...the UofM Consumer Sentiment annoucement was very strong and spiked to 103.2 on consensus of 94.0

Earlier in the trading day...the Business Inventories at 0830am est was good and above expectations and the Industrial Production at 0915am est fell shy of its expectations while still indicating a recovery in manufacturing...

Like I said...its extremely difficult and absurd to trade the announcement itself without any trade signals...

Note: The ES did rally later in the trading day to close higher than its Open...doing such after a Bullish Divergence signal (indicators) was put in after the second sell-off of about 5 points.

The next UofM Consumer Sentiment report is Feb 13th Friday :cool:

Therefore, the best product that suited for this type of trading is a trader that trades these key economic announcements via sticking to whatever trading plan they normally use when there aren't any key economic announcements...

you'll perform a lot better and have less excuses instead of trying to automate trading the annoucements via a software program.

P.S. Always use a hard stop for trading annoucements...none of that mental stop stuff.

NihabaAshi
 
Nihaba,

Thanks for your input.

What I am thinking of is trading only after certain announcements which affect the underlying. Without any other signals. I am thinking in-and-out in less than a minute. First watch that the actual movement is the expected one and then ride the wave for a few ticks and then sell as soon as move reverses.

Do you think that this is too much wishful thinking?
 
Quote from just21:

Any thoughts about non-farm payrolls today?
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Hi just21,

Not really.

Quote from alainniala:

Nihaba,

Thanks for your input.

What I am thinking of is trading only after certain announcements which affect the underlying. Without any other signals. I am thinking in-and-out in less than a minute. First watch that the actual movement is the expected one and then ride the wave for a few ticks and then sell as soon as move reverses.

Do you think that this is too much wishful thinking?
More...

Hi alainniala,

I know a guy that scalps key ecomonic announcements (he's usually in the trade less than a minute)...

he's also a serious tape reader.

No matter what type of trader you are...you always need some sort'uv contingency plan when things don't go your way...

usually that's when big problems happen is when someone trades the announcements without a plan B, plan C et cetera and then freezes in the trade while not using any stops...

letting a small loss turn easily and fast into a big loss (I learned my lesson a long time ago in trying to guess which way it will go without any real plan of action).

I guess what I'm trying to say...if your going to scalp the announcements...

you may want to spend a lot of time in learning about tape reading...

make sure your with a broker that has a reputation of having reliable connections during key economic announcments...

make sure they don't have data stalls...like everything looking normal on your monitor when in reality your looking at info that's like 5 seconds old (maybe that's why we should fear using market orders...rightfully so).

NihabaAshi
 
Quote from NihabaAshi:

Hi alainniala,

...I've often seen the market rally on bad numbers and sell-off on good numbers...



NihabaAshi
More...


NihabaAshi is correct!

The mkt normally moves in the opposite direct because the mkt loves to factor in the most possible scenario before hand, then take profit after they have pushed the mkt. Don't get caught in the bumrush!

Stay out of the mkt and let whatever happens ...happen then you can cherry pick the best entry points especially during parabolic overreactions.:D
 
Quote from alainniala:

Hi all,

I was wondering whether it is possible to trade only after announcements and make a profit.

What products would be best suited for this and do you think that overall it is a good trading strategy?

Thanks.
More...

Yes, it is possible, but not in the way you think it might be done. Do not pay attention to actual numbers just look at price action pattern, print the chart and file it . Keep separate file for each report till you have a library of scenarios . When report is due, go to your file for upcoming report and compare recent price action with your previous charts.
This is IMO only way to trade reports .

Best products are indexes, QQQ,SPY , Bonds and Notes
 
What I was thinking is trading something on screen, not through a broker so that I could right away buy or sell without having to wait.

If market goes up, I start buying and then sell quickly. If market goes down, start selling and then buy at lower point quickly after.

If things go wrong, just cut my losses right away.

Supposing that someone would want to do this, what would be the best way to do it? What software or system would be needed and what's the fastest way to learn about announcements (bloomberg terminal?)

So overall, it would be a very simple strategy. Only trade a second after annoucement, not before.

What does tape reading mean?
 
Quote from alainniala:

What I was thinking is trading something on screen, not through a broker so that I could right away buy or sell without having to wait.

If market goes up, I start buying and then sell quickly. If market goes down, start selling and then buy at lower point quickly after.

If things go wrong, just cut my losses right away.

Supposing that someone would want to do this, what would be the best way to do it? What software or system would be needed and what's the fastest way to learn about announcements (bloomberg terminal?)

So overall, it would be a very simple strategy. Only trade a second after annoucement, not before.

What does tape reading mean?
More...

Use EliteTrader.com search menu in the upper right corner to find info about tape reading...

Let me put it this way...I wouldn't recommend tape reading unless you already have a strong understanding of the price movement of whatever your trading and/or have an excellent method of studying and learning about tape reading when reveiwing past trading days.

My best suggestion is this...

Your obviously trying to develop a method of trading announcements.

Therefore, because your still developing...start testing via a realtime simulator...take very good trading notes, print out lots of charts and start looking for any repetitive patterns.

In addition, to speed up your learning process regardless if your going to start learning about tape reading...

Use the software called Camtasia Studio by Techsmith to do live-recordings of your trading day...

http://www.techsmith.com

Note: Your either going to need a very large hard-drive or a CDrom or DVD recorder to store those live-recordings.

How much?

I do live-recordings every trading day I trade and each session takes from 475mb to 525mb depending upon if I'm trading around 0830am est due to key economic report announcements.

I keep everything on a external hard-drive and every quarter I transfer the info to DVD's eventhough the external hard-drive can hold one year's worth of trading info if I had traded every trading day in a year.

If your serious about trading...regardless if your trading key economic reports or not...

I recommend Camtasia Studio or any other similar like product.

(There's also Lotus Screencam but that doesn't work in Windows XP but only in Windows 98 or less...plus it doesn't have any editing nor presentation tools).

Now you have an idea about the best way to go about in devolping a method and learning how price behaves (reacts) to announcements or anything else.

Start practicing...you should be ready to trade with real money in a few months of hard studying your Camtasia files.

P.S. Nice quick downward spike and then a spike back up in the Non-Farm Employment situation :cool:

NihabaAshi
 
Quote from NihabaAshi:

.....
P.S. Nice quick downward spike and then a spike back up in the Non-Farm Employment situation :cool:

NihabaAshi [/B]
More...

You mean this one? Most violent reaction in the Bund I have seen for quite a while.

Regards

Bernd Kuerbs
 

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